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OK, Now We Can Have a Deficit Conversation

Today we get yet another new proposal on how to restore some balance to the federal budget. Tomorrow we will get another. That will bring the number of new proposals to five or to six, depending on how you count. But, make no mistake: These latest additions to the mix are absolutely essential. In fact, they are what make the whole deficit reduction conversation worth having.

Today’s proposal comes from the Century Foundation, the Economic Policy Institute, and the think-tank Demos (where I’m a senior fellow, although I had nothing to do with this proposal). The coalition calls itelf the “Our Fiscal Future” group. Tomorrow’s proposal will come from a coalition calling itself the “Citizens’ Commission on Jobs, Deficits and America’s Economic Future.”

Although I haven’t seen the Citizen’s Commission report, I gather it is similar to the one from the Fiscal Future group—which, in turn, shares some common ground with a proposal put forward by Rep. Jan Schakowsky of Illinois. The goal is to reduce deficits, and the debt, over the long term, but to do so primarily through greater revenue and more control of health care spending, on the (correct) theory that skyrocketing health care costs are the main reason we’ll be on the hook for so much spending in the first place.

As such, these proposals include a tax on carbon, as part of a cap and trade system; bigger cuts to defense; a more intense effort to drive medicine away from costly, unnecessary overtreatment; and a robust public option that will cut both administrative expenses and payments to health care providers more steeply. The plans published previously sometimes made nods in these directions. The chairmen of the president’s Fiscal Commission, for example, also suggested more cost control on health care reform and even raised the possibility of a public option. But the plans did not feature these ideas as prominently and assumed that, over the long run, the path to fiscal security lay more in cutting other programs rather than raising revenues to meet greater needs. The Fiscal Commission Chairmen, Erskin Bowles and Alan Simpson, called for capping federal expenditures at 21 percent of GDP.

The other key feature of the new plans is timing. The Our Fiscal Future report recognizes that the economy remains very weak—and that boosting growth, in order to create jobs, needs to be the priority in the short term. It calls for a new, temporary stimulus before the spending cuts and revenue increases begin. Not coincidentally, the title of the report and proposal is "Investing in America's Economy."

I can’t say I’ve gone through the new proposals, or even the old ones, carefully enough to give a provision-by-provision accounting of what I prefer—although, given what I know about them, I suspect these new plans are a lot closer to my ideals than the previous ones. (As I wrote earlier, I have a real problem with that 21 percent GDP cap.) But I know for sure that these new plans need to be an equal part of the mix—and recognized as such by the media.

The problem with the budget conversation so far is that it’s been a conversation between the center and the right. The left has been ignored. That’s no way to reach agreement politically and, more important, that’s no way to design policy.